Failing to Beat Apple, Nokia Aims for BlackBerry

A visitor tests a Nokia Lumia smartphone at the Nokia Oyj pavilion at the Mobile World Congress in Barcelona. Photographer: Simon Dawson/Bloomberg

Feb. 27 (Bloomberg) -- As erstwhile smartphone leader Nokia
Oyj fails to gain much headway on Apple Inc. and Samsung
Electronics Co., the Finnish company is setting its sights on a
weaker rival: BlackBerry.

Nokia is betting its partnership with corporate-computing
giant Microsoft Corp. will help it win business users, targeting
BlackBerry’s stronghold. Nokia’s newest Lumia smartphones,
including two introduced this week at the Mobile World Congress
in Barcelona, run on Microsoft’s operating system and come with
Excel, Word and PowerPoint.

Gaining a foothold in the business market is crucial for
Nokia as it and BlackBerry fight for third place in smartphones,
behind Samsung -- the leader in devices using Google Inc.’s
Android -- and Apple. Shares of both Nokia and BlackBerry have
lost 90 percent in the past five years as first consumers and
then companies have turned to Android and Apple’s iOS.

“The importance of winning the business audience on a
scale of 1 to 10 is easily an 11,” said Ramon Llamas, an
analyst at research firm IDC in Boston. He expects Windows Phone
handsets to surpass BlackBerry this year, with Nokia responsible
for most of the gains.

BlackBerry, formerly known as Research In Motion Ltd.,
pioneered the corporate mobile-device market in North America
and still has a strong following in Washington and on Wall
Street. Nokia, the biggest seller of Windows handsets, may
appeal to information-technology chiefs seeking easy
synchronization between smartphones and company computers, which
most often use Microsoft’s operating system.

‘Perfect Moment’

Nokia Chief Executive Officer Stephen Elop, who joined from
Microsoft in 2010, started betting on his former employer’s
operating system after Nokia’s homegrown Symbian software fell
out of favor among consumers.

Lumia unit sales rose to 4.4 million in the fourth quarter,
making up almost 75 percent of all Windows Phone sales.
BlackBerry sold 7.4 million smartphones, for 3.2 percent of the
global market. IPhones and Android devices together account for
about 90 percent of smartphone sales.

Elop says he often gets asked whether he’d be interested in
buying BlackBerry, even though the company hasn’t said it’s for
sale. “When I get asked that question, my answer is ’I’m
interested in their customers,’” he said in an interview in
Barcelona this week. “It’s a really perfect moment to go after
that marketplace.”

Cambodian Coke

Businesses are important to handset manufacturers because
they carry a lot of clout when carriers decide which handsets to
offer. A single corporate account can include thousands of
individual users who tend to favor more expensive devices and
have higher phone bills. Nokia says one European carrier it is
negotiating with receives about a third of its revenue from
companies.

Nokia has been touting its business-customer gains. The
company says Coca-Cola salespeople in Cambodia and Vietnam use
Lumia smartphones process orders while on the move. And it says
London real-estate broker Foxtons Ltd. equipped more than 900
employees with Lumias, allowing them to synchronize calendars
and work on spreadsheets and documents on the road.

Multitasking Whiz

BlackBerry delayed its new operating system, BlackBerry 10,
several times. In March it plans to start U.S. sales of the $199
touch-screen Z10, which Bloomberg’s Rich Jaroslovsky called
“handsome, intuitive to use and a whiz at multitasking.”

The company, based in Waterloo, Ontario, has more than
250,000 enterprise servers around the world, which help it
ensure the security of corporate communications. It says more
than 3,500 companies and government agencies in North America
are considering its latest devices.

“It’s not surprising that competitors are scrambling to
get into the enterprise,” said David J. Smith, BlackBerry’s
executive vice president for mobile computing. He said his
company still offers the greatest security for corporate data.

With mobile devices evolving rapidly and the market
growing, Nokia can win new customers as business users consider
changing providers, according to Chris Weber, the company’s
global sales chief.

“We need to keep pushing,” Weber said over coffee at
Nokia’s headquarters in Espoo, Finland. “It’s a good
opportunity now with people and companies trying to decide which
way to go.”

Simply defeating BlackBerry may not be enough for Nokia.
Apple and Android manufacturers have almost squeezed other
operating systems out of the consumer market, and there’s no
guarantee they won’t do the same in the business world.

Third Ecosystem

In the five years since their introduction, the iPhone and
Android have captured a combined 78 percent of the business-smartphone market, leaving BlackBerry with 16 percent and Nokia
with 4 percent in 2012, according to IDC.

Samsung, the world’s biggest maker of smartphones, bought a
stake security software company Fixmo Inc. last month to improve
its corporate credentials. Apple this month gained some Home
Depot Inc. managers as customers. And in October, the U.S.
Defense Department said it plans to open its network for the
first time to Android devices and iPhones.

Nokia sales chief Weber acknowledges that Apple and Android
are formidable foes. But he insists there can be what he calls a
“third ecosystem” in the smartphone business.

“I am confident that the bet we have on Microsoft gives us
the opportunity to be the third,” Weber said. “I do think
there’s room and I think there is appetite.”